Understanding ASEAN-Australia Trade

Forty years ago, Australia and The Association of Southeast Asian Nations (ASEAN) just began to have diplomatic relations with each other.

Today, Southeast Asia as a whole is Australia’s second largest trading partner after China. Bilateral trade was US$67.9 billion in 2013 and climbing.

Australia and ASEAN, along with New Zealand, formed the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) back in 2010. The deal is one of the world’s most comprehensive FTAs and seeks to eliminate 96% of all duties and tariffs on trade between the three signatories.

But while some countries in Southeast Asia have taken measures to increase their trade with Australia, others have let their relations fall by the wayside.

For its own part, Australia has also not yet taken full advantage of the business and investment opportunities in ASEAN. A 2013 survey by the Australian Trade Commission found that the majority of companies in Australia are not aware of the ASEAN Economic Community and the integration it will bring to the region.

Look below to see where ASEAN-Australia trade currently stands, and learn more about future developments in the region.

Australia-Indonesia Trade

Despite these two countries being right next to each other, Indonesia-Australia trade hasn’t developed as much as it should have. Indonesia is only Australia’s 12th largest trading partner and 19th most popular destination for foreign direct investment (FDI).

There were plans for a Comprehensive Economic Partnership Agreement, but negotiations stopped back in 2013. Indonesia and Australia also have occasional trade disputes, making the relationship even more complicated.

In the future, Indonesian president Joko Widodo wants to attract more investment from Australia. His administration promised easier licensing procedures, better infrastructure, more transparency, and less red-tape for foreign investors.

Australia-Thailand Trade

Thailand has had a bit more success than Indonesia. The country was Australia’s 8th largest trading partner in 2013 and second among other ASEAN countries. Even more impressive is that Thai FDI in Australia has increased by over 20 times since 2007.

The Thailand-Australia Free Trade Agreement (TAFTA) came into effect in 2010 which eliminated 94% of tariffs and quota barriers between the two countries. The remaining 6% will phase out later this year and in 2020.

Australia-Malaysia Trade

Malaysia is Australia’s 9th largest trading partner and the third largest in ASEAN. In addition, Australia is ranked the third biggest investment destination for Malaysian investors. Two-way investment has doubled since 2010 to reach more than $20 billion.

The Australia-Malaysia Free Trade Agreement (MAFTA) came into effect in 2013. The FTA completely removed Australian import tariffs for Malaysian products, along with over 97% of tariffs on Australian exports to Malaysia.

The MAFTA also allows Australian companies to invest in the tourism, insurance, education and telecom sectors – industries that most investors face heavy restrictions in.

Singapore-Australia Trade

Last but not least, Singapore is Australia’s largest trading partner in ASEAN and the 4th in Asia as a whole after China, Japan and South Korea. Singapore is also the largest foreign investor in Australian real estate, making up 28% of all foreign property investments in the country.

Singapore was the first nation in Southeast Asia to have a free-trade agreement with Australia. The Singapore-Australia FTA (SAFTA) began in 2003 and makes customs, business travel, and government procurement easier.

Despite the long history between the two countries, there are still some difficulties. Some Australian states shut Singaporean businesses out of government procurement, and most Australian law degrees are not recognized by Singapore.

About Reid Kirchenbauer

Reid Kirchenbauer is the Founder of InvestAsian. He's experienced with trading stocks and buying property in Thailand, Cambodia, and elsewhere. He's been featured in publications such as Forbes, Nomad Capitalist, Property Report, and Seeking Alpha. Download his free investment guide by clicking here.